It is important to remember the first step in buying a new home is getting pre-approved for a mortgage. This will also help you avoid falling in love with a house that doesn't fit your budget. In addition, there could be problems on your credit that you will only become aware of after being pre-approved. One mistake in your financial past can cost you when getting a mortgage.
Your credit, income and down payment are the three factors that should be considered when getting approved for a mortgage. To avoid paying CMHC's mortgage default insurance, you should have a down payment of 20 percent. This is calculated on how much money you have down as well as your mortgage. A bigger down payment will lead to a smaller loan. To help increase your down payment, borrow money from your RRSP. $25,000 tax free can be pulled for first time buyers, with 15 years to repay. Consider this if you're buying with a partner- together you can contribute $50.000.
A real estate agent is encouraged for first time home buyers. Their expertise could remove some stress from the process. A proper and knowledgeable agent will have a variety of people including insurance agents and credit counselors that can help you with the process.
One of the key things to remember when looking into house is your lifestyle and the costs that come with it. In order to pay for a mortgage, some lifestyle changes might be necessary. If you were laid off from your current job and were out of pocket for three months, could your home still be afforded? Be mindful with the amount the bank approves; it does not all have to be spent.
Make sure your open minded in your new home. It may not be perfect. If the base is there and changes could be made, it might be the right fit. Be considerate of the size and layout, and the condition of the infrastructure. The decorative pieces, like wall paper, can be altered.
Your first home is your "starter home." People are usually in their first home for 7-10 years. It is not permanent so don't think your first house will be in your life forever.
Don't let your emotions get in the way. Always be mindful of the re-sale value of the house wanting to be purchased. In real estate, location is the most important thing.
An approval is made by chance based on your credit, savings and current income all remaining the same. It's common that buyers spend a large amount of their savings and consequently, the banks will adjust their loan terms. Avoid spending your cash until after you close your home.
As recommended by the CMHC, put aside around 1.5 to 4 percent of the purchase price to cover up the closing costs. Save up in case of an emergency. Anything can happen on a rainy day!